THE MURMANSK REGION INVESTMENT STRATEGY UP TO YEAR 2020 AND FOR THE PERIOD UP TO YEAR 2025.

THE THE MMURMANSK REGION INVESTMENT URMANSK REGION INVESTMENT

STRATEGY UP TO YEAR 2020 AND STRATEGY UP TO YEAR 2020 AND

FOR THE PERIOD UP TO YEAR 2025FOR THE PERIOD UP TO YEAR 2025

Ground for elaboration of Investment Strategy

Shaping system of long-term objectives for investment activity as well as the most

efficient ways of their achievement

Shaping system of long-term objectives for investment activity as well as the most

efficient ways of their achievement

Amplification of principal provisions of the Murmansk Region Social and

Economic Development Strategy up to year 2020 and for the period up to year

2025

Amplification of principal provisions of the Murmansk Region Social and

Economic Development Strategy up to year 2020 and for the period up to year

2025

Implementation of May’s Decrees of the President of the Russian FederationImplementation of May’s Decrees of the President of the Russian Federation

Implementation of the National Arctic policy of the Russian Federation, including The

Strategy of Development of the Arctic Zone of the Russian Federation and National Security

Protection for the period up to year 2020

Implementation of the National Arctic policy of the Russian Federation, including The

Strategy of Development of the Arctic Zone of the Russian Federation and National Security

Protection for the period up to year 2020

Amplification of principal provisions of the North-West Federal District Social and Economic

Development Strategy for the period up to year 2020

Amplification of principal provisions of the North-West Federal District Social and Economic

Development Strategy for the period up to year 2020

Implementation of the Standard of activities of the executive authorities of the subject of the

Russian Federation on the provision of congenial investment climate in the region

Implementation of the Standard of activities of the executive authorities of the subject of the

Russian Federation on the provision of congenial investment climate in the region

2

Fixed capital investments behavior

3

Note: evaluated data used for the period of 2013.

46,8

41,7

38,6

56,0

72,4

79,6

21,920,6

16,5

21,2

25,8 26,5

0

10

20

30

40

50

60

70

80

90

2008 2009 2010 2011 2012 2013

0

5

10

15

20

25

30

Volume, bn roubles As percentage of Gross Regional Product

Branch analysis of the Murmansk region development

Aquaculture, fisheries and fish processing

Priority economic activitiesPriority economic activitiesMining industry

Tourism

4Organizations’ fixed capital investments structure behavior (exclusive of small business entities) by economic activities (in percents vs total)

Murmansk region positions in the international and Russian ratings and in investment climate reports

The 4th place in the North-West Federal District according to the 2012-2013 Russian regions investment-grade rating

In the Russian regions investment attractiveness rating the region was referred to IC5 group (average investment attractiveness - second level)

In the Russian regions investment attractiveness rating the region was referred to IC5 group (average investment attractiveness - second level)

The 11th place among 39 Russian regions in the rating for the index of conditions for small and medium business development

The 11th place among 39 Russian regions in the rating for the index of conditions for small and medium business development

The 43rd place among 83 Russian regions in the rating of regions for development of private-public partnership (PPP)

The 43rd place among 83 Russian regions in the rating of regions for development of private-public partnership (PPP)

The city of Murmansk held the 26th place In the World Bank’s Doing business international rating

5

SWOT analysis of Murmansk region investment attractiveness

6

S (STRENGTHS) W (WEAKNESSES) Advantageous geographical location Availability of the only year-round deep-water sea port in the western part of the Arctic Zone of the Russian Federation along with an access railway and an export processing zone at the port territory as well as nuclear-power icebreakers base of “Atomflot”, high transportation and transit potential Abundance, unique character and diversity of the natural resources base High industrial development level Energy redundancy Export-oriented regional economy Unique tourism and recreation potential, profuse cultural and historical heritage of the Laaps and the Kola Bay coast dwellers. High-quality nature of human capital Significant groundwork in the sphere of high technologies which have reference to the key drivers for development of new technological mode Relative maturity of effective system of work with investors Accumulated experience and possibilities to manufacture ecological product

High risks for economic activity and uncomfortable living conditions High physical and functional depreciation of fixed funds Export-oriented raw-material developmental pattern Dependence of the leading mining industry manufacturers on the policy of the holding companies located beyond the region’s territory Large part of black oil fuel in the fuel and energy balance structure Low development potential of the consumer goods and services production sector and low home market capacity Militarized nature of the Murmansk region territory and of adjacent offshore zones Unsteadiness of demographic processes; tensity and imbalance of the labor market Inadequate commercialization of findings of investigations and scientific research Increase of the national internal debt of Murmansk region Existence of ecological problems

О (OPPORTUNITIES) Т (THREATS) Consolidation of role and significance of Arctic areas and natural resources in the system of global economic policy and international commerce Development of Murmansk transport hub and positioning of the hub as a western junction point of the Northern Sea Route Retargeting of the regional economy towards new markets, first of all towards the Asia-Pacific region Positioning of Murmansk region as a Strategic Center for development of the Arctic Zone of the Russian Federation Consistent increase of energy efficiency of the regional economy and social sphere Promotion of realization of the home consumers’ market potential Intensification of near-border cooperation Attraction of qualified migrants, investments, technologies and labor management procedures to the regional economy and social sphere. Introduction of advanced forms of spatial development into the regional economy Transformation of the social services sector into a new driver for consistent growth of the regional economy Initiation of intradepartmental, intraregional and international environmental and innovative projects

Crisis phenomena in the global economy Intensification of the international legislative, technological and other limitations for Arctic development Extension of economic penalties towards the Russian Federation in the near term Existence of the powerful centers of attraction of the financial, migration and innovation flows in the neighboring regions of Russia and the countries of Fenno-Scandinavia. Expansion of the import products and services in the home market Drift of the high-qualified personnel to other regions and countries Potential reduction of the growth rate of the raw materials sector of Murmansk region An imminent conflict between individual activities based on competition for exploitation of various nature resources within the same geo-locations Risks of transboundary transfer of oil and gas pollutants to the territory of Murmansk region and adjacent water space of the Barents Sea Non-sustainability development of small and medium businesses, related to high risks for economic activity and uncomfortable living conditions and necessitate to assume special targeted measures on the part of the Governments of the Russian Federation and Murmansk region in order to provide state support to the regional economy Risk of availability of credit resources most notably for small and medium businesses

О (OPPORTUNITIES) Т (THREATS)

S (

ST

RE

NG

TH

S)

SO "Maxi-Maxi" strategies, use of strong areas for maximum output from the

provided opportunities (faster growth scenario)

Endue Murmansk region with attributes of a metropolitan city in the Arctic Zone of the Russian Federation and the Arctic region as a whole.

ST "Maxi-Mini" strategies, use of strong areas for threats minimizing

(target scenario)

Priority development under the conditions of the world economy revival and growing demand at the world markets particularly for the products and services produced in Murmansk region. Murmansk region is a business, operational and strategic center of the Arctic Zone of the Russian Federation and "Arctic gateways of Russia". Intensive development and introduction of perspective institutional, organizational and technological innovations, inclusive of: high-level and waste-free technologies for processing water biological resources and marine genetic resources; energy- and resource-saving technologies; technologies for adaptation to the global climatic changes of any nature; technologies for use of the renewable energy sources; nanotechnologies; technologies for creation of new construction materials adapted to Arctic conditions; other technological innovations. Spatial structure optimization of the regional economy, particularly of a network of the financial and public non-financial institutions for development (export processing zones, regional clusters, priority and territorial development zones, technology transfer centers, technological parks, centers for energy-saving facilitation, business incubators, industrial parks, sophistication and mastership centers etc.) as well as of innovative infrastructure components in whole.

W (

WE

AK

NE

SS

ES

)

WO "Mini-Maxi" strategies, weak areas minimization through use of the

provided opportunities (base scenario)

Stabilization and holding of the gained positions, shaping of the terms for a starting breakthrough at a stage of the repeated global economy growth under the conditions of restricted investment resources, aggravation of competition along with absence of growth of the demand at the world markets and high volatility of the same. Orientation towards infrastructural and institutional rearrangement of the regional economy before the boosted breakthrough in the moment when the global economy will start growing Orientation of the regional investment policy towards costs reduction and the regional economy competitive growth by means of technical and technological re-equipment, decrease of energy and resources consumption by the manufacture, improvement of the power and transportation complexes, development of management practices, advancement of professional qualifications and extension of competencies of the intellectual resources based on human development programs.

WT "Mini-Mini" strategies, weak areas and threats minimization

(stabilization scenario)

Overcoming (minimization) of the negative consequences of the global economy deceleration and shaping of the terms for a starting breakthrough at a stage of the repeated global economy growth, Abandonment of the raw materials export model backed by extension of mining and simple raw materials processing, low rates of infrastructure modernization and deterioration of competitive ability of manufacture which in total results in a decreasing trend of the GRP growing rate under the conditions of investment activity fall, price-related competition increase and reduction of demand for the Murmansk region output at the key markets. Orientation of the regional investment policy towards time efficient control ensuring rapid localization and subsequent elimination of the negative phenomena.

Scenarios of implementation of various strands of investment policy in Murmansk region (TOWS analysis)

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Objectives and indicators of Investment Strategy

Principal objective of Investment Strategy:ensuring the maximum rate of investments inflow to the Arctic Zone of the Russian Federation

Creation of institutional conditions for consistent growth and development

Ensuring the human resources investment activity

Infrastructure’s development

Providing innovation-based development of economy and social sphere of Murmansk region

Technical reequipment and modernization of priority sectors and development of newly created activities

Target description 2016 2020 2025 Gross regional output per capita (th. rubles) 493 982 2018Murmansk region position in the Russian regions investment attractiveness rating by the National rating agency

IC4 group (average investment

attractiveness – first level)

IC3 group (high investment

attractiveness – third level)

IC2 group (high investment

attractiveness – second level)

Murmansk region position in the Russian regions investment rating by the Expert RA (rating agency)

«3B1 – reduced potential – moderate

risk» group

«3В1 – reduced potential – moderate

risk» group

«2А – average potential – minimum risk» group (top ten

positions)

Murmansk city position in regard of business environment in the Doing business international rating by the World Bank among first 15 cities among first 12 cities among first 10 cities

Fixed capital investments volume (exclusive of budgetary funds, bn rubles) 98.4 201.3 469.5

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Objective 1. Creation of institutional conditions for consistent growth and development (comprised of 24 tasks)

Achieved by measures implementation towards:

improvement of investment process management system;

improvement of the regional investment legislation;

developing regional programs and projects, and making changes in the existing programs;

increasing the information transparency of the investment process;

Improvement of cooperation among state, regional and municipal government’s mechanisms;

reducing the administrative barriers;

supporting small, medium and innovative enterprise.

Target description 2016 2020 2025 Implementation efficiency assessment of the introduced components of the investment Standard of activities of the Murmansk region executive bodies on the provision of congenial investment climate in the region on the part of the community of entrepreneurs (points)

7 8 8

Implementation efficiency assessment of the program for support of small and medium business in Murmansk region on the part of the community of entrepreneurs (points)

7 8 8

Turnover of the products and services produced by the small enterprises, inclusive of micro-enterprises and private entrepreneurs (% against total)

124 160 2.1 fold

Number of small and medium business entities operating at the territory of Murmansk region (% against basic) 112.4 130 150

Volume of direct foreign investments (% against basic) 120 130 150The ration between the national debt volume of Murmansk region and the total annual regional budget income volume (exclusive of the uncompensated receipts volume, % against basic)

80 70 69

PPP development level (%) 55 77 889


Objective 2. Infrastructure’s development (comprised of 16 tasks)


transport infrastructure

power infrastructure;

information and telecommunications infrastructure;

social infrastructure;

communal infrastructure.

Target description 2016 2020 2025

Index of the fixed funds replacement (%) 6.5 14.3 16.4

Deadline for the consumers connection (up to 150 kW) starting with receipt of an application for utility connection and up to the date of signing a certificate on utility connection (days) 45 40 40

Maximum number of procedures necessary for getting a building permit for a standard capital construction object for administrative and social use 13 11 11

Maximum term of accomplishment of all of the procedures necessary for getting a building permit for a standard capital construction object for administrative and social use (days) 90 56 56

Maximum number of stages (procedures) necessary for utility connection to the electric-power infrastructure facilities 6 5 5


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Objective 3. Ensuring the human resources

investment activity (comprised of 19 tasks)

Achieved by measures implementation

towards:

implementationion of forecast & planning for

regional labor market development;

ensuring a balance in the regional labor market;

human investment, retraining and enhancement of

competencies of the economically active

population

11


Proportion of students in the state (municipal) general educational institutions which have an opportunity to study according to the principal up-to-date requirements, against total number of students (percents) 88 96 97

Proportion of full-time graduates of the professional educational institutions, which were employed within one year after finishing education in the obtained specialty (profession), against total number (percents) 51.1 55.9 56.4

Proportion of high-qualified employees against total number of qualified employees in the region (percents) 30.6 33.3 36.6


Objective 4. Providing innovation-based

development of economy and social sphere of

Murmansk region (comprised of 7 tasks)


creating and developing mechanisms of complex

support of innovative activities at all stages of the

innovation process;

development of the innovative infrastructure,

including the support infrastructure for small and

medium enterprise;

coordinating the regional cluster initiatives.

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Proportion of organizations introducing technological innovations against total number of assessed organizations (percents) 11,5 13,7 14,5

A share of output from high-technology and science-intensive industries against gross region output (percents) 13.5 16,0 18,1


Objective 5. Technical reequipment and modernization of priority sectors and development of newly created activities (comprised of 17 tasks)


mining complex

fishing complex

agro-industrial complex

commercial exploitation of hydrocarbon potential of arctic continental shelf

tourism and recreation


Index of production associated with “Mining operations” activity (% against basic) 111.5 150 4 fold

Index of production associated with “Metallurgical production and finished metal products manufacture” activity (% against total)

106.3 130 190

Index of production associated with “Production of transport means and equipment” activity (% against basic) 135.6 2 fold 4.3 fold

A share of newly created activities in the production structure (% against basic) - - 34.7

Volume of artificial fish breeding by fish-farming enterprises (th. tons) 38.4 83.9 98.9

Growth rate of home and inbound tourist flow in Murmansk region (% against total) - 156.4 2 fold

Growth rate of volume of the fee-based tourism-associated services rendered to the citizens in Murmansk region (% against basic) 108.0 122.8 145.2

13


Formation of clusters and allocation of industrial growth centers

2014-2016 2017-2020 2021-2025

Fish industry cluster (Purpose: preservation and enhancement of the resource potential of fisheries and implementation of measures for the modernization and commissioning of new capacities for deep processing

of aquatic biological resources, and marine biotechnologies with the new technological and organizational basis)

Educational cluster(Purpose: development of continuing and further education system, formation of motivational incentives, retraining and enhancement of competencies of the economically active population)

Mining and chemical and metallurgical cluster (Purpose: the revival of a rare metal industry of Russia based on the mineral resource base of the Murmansk region)

Technological cluster for Arctic offshore mining (Purpose: allocation of leading positions to Murmansk region in the field of service, personnel and technological support in hydrocarbon production on the continental

shelf of the Barents Sea)

Tourism and recreation cluster (Purpose: development of branded tourist products (travel brands) of Murmansk region and improvement of the competitiveness of the industry of tourism and recreational services

in the international market)

Manufacturing and transport and logistics cluster (Purpose: increase in export of transport services based on a year-round deep-sea hub integrated into the international transport system)

Regional maritime service cluster (Purpose: creation of a service core to ensure maritime navigation along the Northern Sea Route)

Arctic technology innovation cluster (Purpose: adaptation of existing and emerging technologies to the Arctic conditions and bringing

them to the stage of commercial appeal and commercial operation)

Cluster of Nordic design and traditional crafts (Purpose: development of small and micro enterprises in the service sector, national and art

crafts, ensuring the release of their products outside the regional market)

Export-oriented food cluster (Purpose: entry into Russian and foreign markets with

a recognizable brand of organic foods under the "premium” brand)

New energy cluster (Purpose: diversification of energy balance of the region, the

expansion of electricity production based on renewable sources)

Financial mechanisms for the implementation of the Investment Strategy

government programs of the Russian Federation and Murmansk region

private investments

foreign investments

Total financial costs on the implementation of the Strategy (including activities and

investment projects) are 449 billions rubles, including costs from federal, regional

and municipal budgets as well as extra-budgetary funds

Financing sources: Financing sources:

15

billions rubles

22,14,0

145,5277,3

RB MB FB EBF

Expected results of implementation of the Investment Strategy

Murmansk region would play a leading role in realization of the national interests of the Russian Federation in the

Arctic region

Murmansk would strengthen positions of head scientific, skilled, cultural, business and financial

center of the Arctic, as well as leading core of maritime activities service providing in the Arctic

Zone of the Russian Federation

The city of Murmansk would take place in first among first 10 cities of Russia in regard of business environment in the international and

Russian ratings

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THE MURMANSK REGION INVESTMENT STRATEGY UP TO YEAR 2020 AND FOR THE PERIOD UP TO YEAR 2025.

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Transcript of THE MURMANSK REGION INVESTMENT STRATEGY UP TO YEAR 2020 AND FOR THE PERIOD UP TO YEAR 2025.